Additionally, officials in Vietnam on Tuesday effectively devalued their currency in a step aimed at easing market pressures related to soaring inflation rates.
In the U.S., investors sold off U.S. Treasury securities, one day after Federal Reserve Chairman Ben Bernanke warned that the run-up in oil prices is adding to upside risks for inflation. Meanwhile, the Bank of Canada surprised markets Tuesday by holding off on an expected interest-rate cut; the central bank said the risk of inflation, driven by high energy prices, had grown too great to allow for further rate cuts.
The European Central Bank is also considering interest rate increases to fend off inflation.
Developing economies -- some of which fought bruising battles to tame inflation in the 1980s and 1990s -- seem particularly vulnerable. Many economists started the year worried that the biggest threat facing these economies was weaker growth, in the wake of the U.S. slowdown. Instead, inflation is turning out to be a potentially thornier problem.
The World Bank predicted only modest declines in growth rates in developing countries this year in its annual Global Development Finance report, released Tuesday. But it said surging oil and food prices are stoking inflation pressures. Rising commodity prices are adding to the inflationary froth created by several years of robust growth in these economies.